Mattel knows when to fold 'em

Chip Somodevilla/Getty Images News

At the height of the drama surrounding the "Made in China" product recalls by Mattel, Passport warned against simply blaming China for product safety flaws, and urged Western companies to take some responsibility for what goes through their supply chains. In a surprising move on Friday, Mattel did exactly that—and went a step further, publicly apologizing to the Chinese. Mattel's Thomas Debrowski, executive vice-president for worldwide operations, declared in a meeting with a senior Chinese official in Beijing:

Mattel takes full responsibility for these recalls and apologizes personally to you, the Chinese people and all of our customers who received the toys."

As the Financial Times pointed out, this was in stark contrast to Mattel CEO Robert Eckert's comments to the U.S. Senate last week, where he said, "We were let down, and so we let you down." Mattel obviously realized that with 65 percent of the company's toys manufactured in China, it's clearly not in its interest to blame China or its regulatory environment. A continued backlash against toys made in China would only lead to protectionism, bad news for a country with extensive overseas operations. Mattel's investors seem to have realized the same; the apology prompted a rise in the company's stock price—not a decline.